Dispute Heats Up Over Proposed New Fees for Playing Songs on the Radio

Kesha may be the voice of her hit single “Tik Tok,” but when her royalty check arrives for its play on the radio, the money is for her role as co-writer of the song.

For more than 70 years, royalty payments for air time have flowed to the songwriters and music publishers but not to the musicians or record companies. Now there is a renewed drive to revisit that arrangement, and in recent weeks the volume of the discussion has increased several decibels.

For the radio industry, that has meant taking the battle to a place it knows: the airwaves. Over a recent 10-day period, a 60-second advertisement distributed by the National Association of Broadcasters was broadcast free almost 35,000 times on radio stations across the country, according to Media Monitors, which tracks radio advertisements.

One version of the ad describes a performance fee as a tax that could “bankrupt local radio stations.” And who gets the money? “Giant record companies, most of which are in foreign countries,” the ad says, in reference to the four major labels, three of which have corporate parents outside the United States.

In response, the MusicFirst Coalition, a group that includes the record companies and hundreds of artists, began an ad campaign of its own, though on a much smaller scale. A print ad, which ran in Roll Call, a Washington newspaper popular on Capitol Hill, featured a pig with an antenna for a tail and its head buried in a pail labeled “Bailout Funds.” A radio spot ran on a local Washington station. The group also introduced a new Web site, piggyradio.com.

“We just want to make a couple of points” with the ads, said Marty Machowsky, a spokesman for MusicFirst. “The broadcasters have the free use of airwaves and are making billions of dollars each year without paying artists.”

This dispute is another example of media businesses taking their disagreements out of conference rooms and into the public square. Disney and Cablevision recently ran competing ads about a dispute over retransmission fees, similar to a public fight between Scripps Network and Cablevision this year.

In this case, though, there is a clear legislative campaign afoot, and one that is not entirely new. Musicians have long sought a royalty payment for over-the-air play. Frank Sinatra, for example, made a concerted effort for the change in the 1980s. His daughter Nancy Sinatra is outspoken in favor of a royalty, as are several other artists, including Billy Corgan of the Smashing Pumpkins, who testified before Congress last year on behalf of such payments. Broadcasters and their supporters in Congress have long countered that playing music on the radio provides musicians with free promotion, and that a new fee could hurt the smallest stations the most.

Photo

A print ad from the MusicFirst Coalition.

Last fall, both the House and Senate judiciary committees approved bills that would create a performance right for musicians, and in October, the leaders of the two committees sent supporters and opponents of the bills a letter asking them to negotiate a resolution before the bills reached the full floors. “With your good faith participation,” the letter said, “we are confident that an acceptable and mutually beneficial resolution to this longstanding disagreement can be found.”

No resolution has been reached, however, and it is not yet clear how — or whether — the negative advertisements have affected private discussions.

“We’ve had talks. We don’t call them negotiations,” said Dennis Wharton, a spokesman for the broadcasters association. “For us, this bill is a game changer. You’re talking about hundreds of millions of dollars out of a business that’s struggling.”

The lobbying also included more traditional forms last week, as MusicFirst announced the addition of several supporters, including the National Association for the Advancement of Colored People and the National Council of Women’s Organizations. Meanwhile, more than 400 broadcasters visited Washington and spent time on Capitol Hill lobbying lawmakers.

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Billy Corgan of the Smashing Pumpkins waited to testify last year before a House panel.Credit
Alex Brandon/Associated Press

It is not possible to know the exact amount of money at stake for the two sides, particularly since any rates would be established as part of the possible agreement, or set by the federal Copyright Royalty Board after a law is enacted. Still, both sides say the figure is probably in the hundreds of millions of dollars annually. After administrative fees, the money would essentially be split evenly between the performers and the recording’s copyright holder, in most cases a record label.

Performance royalties are already collected for songs played on satellite and online radio, which are covered under laws passed in the 1990s. Last year, SoundExchange, the organization that collects performance fees, brought in more than $180 million in fees, according to John L. Simson, the group’s executive director.

Most other countries already require that a royalty be paid to performers for over-the-air play time, but American artists do not see that money because there is no payment for foreign musicians in the United States. Mr. Simson estimated that $100 million to $150 million would come in each year from other countries if royalty payments became mandatory.

Steve Newberry, the chief executive of the Commonwealth Broadcasting Company, which owns two dozen small radio stations, and the chairman of the broadcasting association’s joint board, said it was possible a deal could be reached.

“I don’t want to be a person that is so close-minded that I won’t look for a solution,” he said. “But we want to look at this so that it’s revenue neutral for radio but helps the record industry.”

A version of this article appears in print on March 8, 2010, on Page B3 of the New York edition with the headline: Dispute Heats Up Over Proposed New Fees for Playing Songs on the Radio. Order Reprints|Today's Paper|Subscribe